Iran oil sanctions waiver for Asian giants

New York, November 30, 2013

The US State Department has extended six-month Iran sanctions waivers to China, India, South Korea and other countries in exchange for their reducing purchases of Iranian crude oil earlier this year.

The waivers had been expected. Under a law governing sanctions imposed on Iran's disputed nuclear program by the United States, the State Department is required to determine whether the Islamic Republic's oil consumers have reduced their purchases.

The decision comes even after the United States and five other global powers, known as the P5+1, agreed in Geneva this month to ease Iran's access to about $4.2 billion in foreign currency reserves for six months in exchange for Tehran's taking steps to curb its nuclear program.

The waivers, which the State Department calls exceptions, mean that banks in the consuming countries will not face being cut off from the US financial system for the next six months.

"We will continue to aggressively enforce our sanctions over the next six months, as we work to determine whether there is a comprehensive solution that gives us confidence that the Iranian nuclear program is for exclusively peaceful purposes," Secretary of State John Kerry said in a statement.

Since the beginning of the sanctions regime in 2012, all 20 of Iran's oil customers have qualified for the periodic waivers. But despite the Geneva agreement, the United States reserves the right to sanction any oil consuming country should it suddenly increase its purchases.

Officials from the Departments of State, Treasury and Commerce have worked with Iran's buyers since 2012 in an effort to find alternative sources of crude, including oil from Saudi Arabia.

Under the Geneva accord, the P5+1 agreed to pause efforts to further reduce Iran's crude oil sales, allowing consuming countries to continue buying their "current average amounts of crude oil." The interim agreement is meant to build confidence for a final agreement on the nuclear program.

Under that agreement, Iran's oil exports will be held to about 1 million barrels per day, the level its sales have averaged this year. Iran's oil shipments were about 2.5 million bpd in the beginning of 2012, before US and European sanctions took effect.

The US sanctions law could have driven Iran's oil sales even lower if Iran and the P5+1 did not come to agreement in Geneva.

The State Department said Turkey and Taiwan also qualified for the waivers. Malaysia, South Africa, Singapore and Sri Lanka, which no longer purchase oil from Iran, also qualified for the exceptions.-Reuters